CCL is glad that the Obama administration is doing something serious about climate change. However, regulation is a blunt instrument for accomplishing it. Instead of the club of regulation, we much prefer the scalpel of congressional action for Carbon Fee and Dividend: a steadily and aggressively increasing price on fossil carbon with border adjustments and all revenue returned to households.

Why Carbon Fee and Dividend vs. regulation

Obama’s plan relies on EPA regulation to reduce greenhouse gas emissions, but it is no one’s ideal situation. Even former EPA head Lisa Jackson concedes that regulation is not the best way to reduce emissions [1]. Using positively rosy predictions [2], one study found EPA regulation would result in a maximum 12.7% reduction in greenhouse gas emissions below 2005 levels by 2020 [3, 4]. By contrast, the CCL proposal would reduce emissions by an estimated 31% below 1990 levels by 2025, and to 50% below 1990 levels by 2035 [5, 6, 7].

In addition to being inferior to a carbon tax for actually solving the problem, regulation also cannot protect American businesses or the poor since there is no possibility of a border adjustment or a dividend.

Statement of Lisa P. Jackson/ Administrator, U.S. Environmental Protection Agency/ Hearing on American Clean Energy and Security Act of 2009/ Committee on Energy and Commerce / U.S. House of Representatives ”. April 22, 2009.